Vera Bradley, Inc. (VRA – Snapshot Report) hasn’t been able to figure out how to turn around its sluggish business. This Zacks Rank #5 (Strong Sell) is expected to see falling earnings in fiscal 2016.
Vera Bradley sells women’s handbags and accessories with its distinctive pattern designs. It operates full-line and factory outlet stores in the United States and on verabradley.com and sells in 2,700 specialty retail stores, mostly in the United States.
Outlook Remains Challenged
On Mar 11, Vera Bradley reported fourth quarter results and missed on the Zacks Consensus by 2 cents. Earnings were $0.43 versus the Zacks Consensus of $0.45.
Vera Bradley described business trends as remaining “difficult.” It had expected that some of its initiatives to improve the business would be showing some results but that hasn’t been the case.
It said both traffic and sales remained “extremely challenging.”
Comparable Store Sales Sank in Q4
Vera Bradley has been struggling for some time. It has tried moderating its patterns and has even gone to some leather handbags and accessories as leather has been popular.
But in the fiscal fourth quarter, comparable sales, which included e-commerce, fell 14.4%. It was even worse if you just look at the stores. Comparable store sales fell 20.7% while e-commerce sales fell just 7.3%.
Sales fell as store traffic declined.
This was the holiday quarter. The last thing a retailer wants to see if declining foot traffic.
Fiscal 2016 Estimates Slashed
Not surprisingly, the analysts are bearish on Vera Bradley for this fiscal year.
7 estimates have been cut in the last week pushing the fiscal 2016 Zacks Consensus Estimate down to $0.83 from $1.23.
That’s an earnings decline of 18% from fiscal 2015.
One analyst is even worried about next year as 1 estimate was just cut for fiscal 2017 in the last week as well.
Shares at Multi-Year Low
Shares plunged on the earnings report but even though they are at multi-year lows, they’re not exactly cheap.
Vera Bradley is still trading with a forward P/E of 18.7 which is above the average of the S&P 500 at 17.7x. You’re not getting a bargain bin stock at these levels.
Retail is a very difficult industry right now. There are many haves and have-nots.
If you really want to own a specialty retailer, you might want to consider DSW Inc. (DSW – Snapshot Report). It’s a Zacks Rank #2 (Buy) and is expected to grow earnings by 9.8% this year. Want More of Our Best Recommendations?
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